A Comparative Analysis of Nonperforming Assets Management in Nationalised Banks of India (For the period 2011-12 to 2015-16)

Abstract

Banking Industry play a very important role in economic development of a country through extending credit to various deficit sectors and earn income in the form of interest on advance and other incomes like commission , consultancy fee etc. But the credit creation activity creates credit risk to the bank which results in nonperforming assets. NPA is one of the important parameter in analysing the performance of banks as it reduces the profit margin and increases the carrying cost of such nonperforming assets in the form of necessary provisions to counter credit risk. A high level of nonperforming assets also makes negative impact on net worth of the bank. So NPAs are big problem to the bank as banks are under pressure to maintain a desire level of capital adequacy ratio.
The current research paper is based on the study of nonperforming assets of nineteen nationalised banks of India. The objectives of the current study are to access the level of NPAs and their comparison among nineteen nationalised banks for previous five years. The data for five financial years has been collected and analysed by arithmetic mean, standard deviation, average annual
growth rate and ranking method. One way ANOVA has been used to test whether there is significant difference in the level of NPAs of nationalised banks. On the basis of the study it was found that Syndicate Bank, Vijaya Bank, Indian Bank and Bank of Baroda performed well compare to other nationalised banks in terms of strict control over their NPAs year to year basis, however Union Bank of India, United bank of India and Indian Bank were poor performer in NPAs management during the study period from 2011-12 to 2015-16.